Earle E. Murphy - Page 3

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                                         FINDINGS OF FACT                                              

                  Some of the facts have been stipulated and are so found.                             
            The stipulation of facts and attached exhibits are incorporated                            
            herein by this reference.  At the time the petition was filed,                             
            petitioner resided in Lake Placid, New York.                                               
                  Petitioner incorporated FSRC in 1963.  FSRC acquired land in                         
            Howell Township, New Jersey (the Township), upon which it                                  
            operated a camping and recreational business, known as Deep                                
            Hollow Park.  Business activities at Deep Hollow Park included                             
            selling swimming memberships, renting recreational vehicles,                               
            mobile homes, and trailers, and providing space for overnight                              
            camping.  Petitioner owned 49 of the 50 initial outstanding                                
            shares of stock in FSRC, and petitioner's wife owned the                                   
            remaining share.2  The total number of shares outstanding                                  
            eventually increased to 100.3                                                              
                  On June 16, 1980, the board of directors of FSRC approved a                          
            conditional purchase contract to purchase property adjacent to                             
            Deep Hollow Park.  The contract was subject to the corporation's                           
            receiving the necessary approvals from the Township for its                                

            2In the mid-1970's, petitioner acquired his wife's share.                                  
            3Petitioner testified that by 1988, he had given 90 shares                                 
            of FSRC stock to his daughters.  However, he produced no                                   
            documentation of the transfer, he never filed any gift tax                                 
            returns with respect to the transfer of these shares, and he                               
            reported that he had received the entire 1988 liquidating                                  
            distribution on his own return.                                                            




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